I've not worked in the public markets or with financial statement analyses before so I am very confused on what Apple is doing with the bond issuing. Why would such a cash drowning company be willing to pay loan interests?
The only argument I understand is that most of the cash that Apple has is offshore and moving them back to the US is more expensive due to tax laws. Couple questions:
1.) How does stock buy backs help the stock price?
(Assuming you bought this company for $100 with 100 shares and it has $20 on hand. That means that you think the company without the cash is worth $80. So if the company pays out the $20 to buy back 20 shares. Shouldn't the company end up just with 80 shares that sums up to $80?)
2.) Similar question for increasing dividends
3.) Does this mean that investor thinks they can invest that money better than Apple does so they rather have the cash back?
4.) Shouldn't there be re-investment risk and also tax consequences for increasing dividends?
I know these are rookie questions but any comments help. Thanks!
http://dealbreaker.com/2013/04/apple-sold-some-bonds/
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